FRS Update #9 (3/30/2011)

I hope everyone is having a great week! For many the proposed changes to the FRS have added un-wanted stress. I hope that my updates help everyone better understand what is going on and how any proposed changes might effect each FRS employee. As you all know from my FRS update on 3/29/11 the Senate has a new bill SPB7094, it is a re-write of SB1130, the new bill is trying to match HB1405. Remember that for a bill to become a law it must pass through the House and Senate exactly the same. I have read the new bill (177 pages), below I have listed the proposed changes in the bill:

– ALL FRS members will contribute 3% of his or her gross compensation (pre-tax) towards whichever retirement plan they are in. Members are fully vested from day one in all contributions they paid into the Investment or Pension Plan.

– Raises the normal retirement age for new Special Risk Class members enrolled after 7/1/2011 from age 55 to 62 or from 25 years to 30 years, if they enroll in the pension plan.

– Closes the pension plan to all new FRS members (except for Special Risk Class). This means that the Investment Plan will be the only choice (except for Special Risk Class).

– Closes DROP to NEW participants effective 7/1/2011

*** This Bill does not effect anyone who is in DROP prior to 7/1/2011, nor does any Bill currently being proposed. So if this bill passes your last chance to enter DROP will be 6/1/2011.

– Eliminates the Cost of Living Adjustment (COLA) for all service earned on or after 7/1/2011. So if you have 25 years in the FRS Pension Plan you will still get a 3% COLA for those years, just not for any years of service after 7/1/2011.

My advice is that if you think that these proposed changes could impact your decision on when to retire or when to enter DROP, PLEASE email me ASAP to schedule a time to meet and discuss. We want to make EDUCATED decisions to make sure you have the best retirement possible.

If you know anyone who would benefit from my FRS updates please forward my email to them OR send me their name and email address and I will add them to my email list.